RAJENDRA CONSTRUCTION COMPANY v. MAHARASHTRA HOUSING AND AREA DEVELOPMENT AUTHORITY AND ORS.

On behalf of the appellant, it was contended that the proceedings were governed by the Arbitration Act, 1940 (old Act) and the Arbitration and Conciliation Act, 1996 (new Act) had no application; that since it was not necessary for the Arbitrator to record reasons under the old Act and as there was no agreement between the parties nor the contract provided for recording of reasons by the Arbitrator, he was under no obligation to make reasoned awards; that the trial court had again considered the objections raised by the respondent and the awards were made rule of C the court; that the trial court also ordered to draw decrees in terms of the awards; and, therefore, there was no reason for the High Court to interfere with the awards passed by the sole Arbitrator as also the judgment and order passed by the trial court. D On behalf of the respondent, it was contended that it was incumbent on the sole Arbitrator to apply his mind to the rival contentions of the parties, to consider the issues framed by the trial court and to record findings on those issues supported by reasons and to make awards; that even if there \Vas no clause in the contract or agreement providing for recording of reasons, since the Arbitrator was to decide the question and E to adjudicate the matter, he ought to have recorded reasons in support of his decision; and that recording of reasons in support of the order was part and parcel of 'natural justice' and, therefore, an unreasoned award should be treated as null and void and ineffective. Allowing the appeal in part, the Court HELD: I. The present awards are not under the Arbitration and Conciliation Act, 1996 but under the Arbitration Act, 1940. It is, therefore, obvious that they could not have been set aside by the High Court on the ground that they were not supported by reasons and were not speaking awards. [593-F-G! F G Raipur Development Authority v. Mis. Chokhamal Contractors, [1989] 2 sec 721, followed. T.N. Electricity Board v. Bridge Tunnel Construction, [1997] 4 SCC H 584 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R. A 121; Kundale & Associates v. Konkan Hotels (P) Ltd., ( 1999] 3 SCC 533 and Build India Construction System v. Union of India, (2002] 5 SCC 433, relied on. State of Punjab v. Bhag Singh, (2004] 1 SCC 547 and Gora Lal v. B Union of India, [2003] 12 sec 459, held inapplicable. Breen v. Amalgamated Engineering Union, (1971] 1 All ER 1148 and Alexander Machinery (Dedley) Ltd. v. Crabtree, (1974] ICR 120, referred to. C D E F Ronald Bernstein: Hand Book of Arbitration Practice, referred to.

#2. Therefore, the awards passed by the sole Arbitrator cannot be held illegal or unlawful. In making such awards the rule of the court, the trial court had not committed any illegality which vitiated the awards and the High Court could not have set them aside. (595-E-F]

#3. The sole Arbitrator has the power to award interest for the pre reference, pendente lite and post-award stages. Keeping in view the facts and circumstances of the present case, it would be proper, equitable and in the interest of justice if the rate of interest is reduced to 10 per cent per annum. (596-A-B] Bhagwati Oxygen Ltd. v. Hindustan Copper Ltd., AIR (2005) SC 2071, relied on.